This week’s news was full of stories covering the emergence of a new kind of tech campus in New York and Seattle. These phenomenally-resourced graduate programs in applied math, science, technology and data analytics feature intentional, tighter-than-ever integration of academics and industry and have big implications for commercial office real estate.

Renderings of the planned Roosevelt Island campus

This School was Built for Tech Last year, the City of New York crafted an unprecedented deal with Cornell and Technion – The Israel Institute for Technology and subject of the book "Startup Nation". New York granted the educators development rights for over two million square feet on Roosevelt Island and up to $100mm in capital improvements for a new technical campus.

This week the New York Times published an update on Cornell’s progress. Students are already enrolled in the first “beta” class, held temporarily in Google’s building in Chesea. Classes began in January, and they don’t look anything like the standard assignment: business courses are mandatory, in addition to technical work. “Students are required to work with mentors from the private sector to design and create new products.” The US Commerce Department has stationed a patent officer on-site to facilitate applications. Many, many more innovations will be added – but to what end?

Class in Session: Cornell Tech Practicum

Academics and Office: A Simultaneous Model As context, in the wake of the Financial Crisis, the Roosevelt Island partnership was envisioned to reduce the City’s dependence on financial services. The thesis: attract, educate, and retain engineering and tech students who might otherwise flock to the west coast.

The City, the schools, and local VC communities will invest in helping students start new companies, get funding, and grow - all in New York. Alred Spector, VP of Engineering at Google, described the new model: “We often think about education happening first and entrepreneurship happening second. We are trying to intertwine those at the same time.” Google, Microsoft and other talent-hungry firms are enthusiastic, as are students - one referring to the program as “the hottest ticket to the hottest show in town.”

The buzz around Roosevelt Island has captured the attention and imagination of a number of institutions, including NYU, Carnegie Mellon and Columbia. New York University has announced plans to create an applied-sciences institute in Brooklyn. Carnegie Mellon is exploring a Brooklyn Navy Yard campus in partnership with the TV and movie production facility Steiner Studios as part of the firm’s 60-acre master plan. Columbia aims to build an Institute for Data Sciences and Engineering as part of its $6 billion, 17 acre of Manhattanville campus extension.

In Seattle, the University of Washington in Bothell has a new school too - this one dedicated to STEM: science, technology, engineering and mathematics. To-date, UW Bothell is the only university in the state with all STEM fields in one academic unit. Like the Cornell/Technion partnership, the UW’s school is intended to meet demand from businesses for graduates in related fields. Industry executives will serve on the school's advisory board.

UW Researchers Jeff Gardner, Chance Reschke

In addition, The University of Washington’s primary campus and local industry titans are building additional program focused on Big Data:“The university has opened the eScience Institute for studying data across disciplines and has a new Ph.D. program in Big Data. It also has many rich and powerful neighbors in tech to finance its data initiatives and lure big-name faculty members. Since 2000, Microsoft has donated $22 million to the computer science program; Google gives several million dollars a year. And Amazon has endowed two professorships with $2 million; Jeff Bezos, its founder and chief executive, personally recruited Carlos Guestrin for computer science and Emily B. Fox for statistics.”

...So, where will all these students go to work?

In Class A Office: “A” is for Adaptation Educators are not the only ones who have had to adapt!

Office absorption on both coasts is shifting. Many financial services and legal firms have retracted, shedding excess floor space. Meanwhile, technical, computing, gaming, software and design teams are expanding. While start-ups often want small, quirky, cheap space - once funded, they need and can afford more. But their desires for that space may be significantly different than those of the prior occupants. Landlords are responding.

In Seattle, Beacon Capital is working hard to lease up Columbia Center – a 76 floor, gleaming black monolith - opening floor plans, adding collaborative work spaces and trading out dark mahogany for lighter finishes to court a new kind of tenant.

In New York, tech tenants are hot too – because they attract other tech tenants and drive submarket rents. The Commercial Observer labeled 2012 as the year tech and media companies invaded Midtown South. As a result, by year-end, rents were “up four times as much as Midtown, which [was] only up 3 percent year over year,” per Jonathan Mazur, director of research at Cushman & Wakefield.

Downtown Brooklyn landlords have lost tenants like Bear Stearns, Chase Bank and Morgan Stanley and won new ones, including what Forest City described as “a lot of tech companies and ‘do-it-yourself’ firms looking at Class A”. The Polytechnic Institute of New York University and MakerBot Industries – a 3-D printer manufacturer are also new BK residents. The shift in tenancy has come with some adjustments: WSJ reported that Makerbot’s landlord added a lease clause specifying that Makerbot comply with science-fi writer Isaac Asimov's Three Laws of Robotics, requiring robots to “follow orders, not injure humans and protect their own existence.”

The current tech boom is widely referred to as ‘healthier demand’ than the bubble of the late '90s because most of todays' tech tenants have real products, defined services and revenue streams. So if a shift in demand is in process, and if it’s real enough to last – what else should we keep in mind?

Justin Bedecarre, 42 Floors

Tenants Are Changing: Are You A Boulder?? I spoke on this subject last week with Justin Bedecarre, co-founder designated “CRE Professional” of 42 Floors, an office leasing and real estate information company. 42 Floors is often described as the ‘Kayak’ of leasing, allowing easy, fast, visually-rich search. The team has raised over $17mm in financing and is growing in leaps and bounds. You can hear Justin smile while he’s talking. It may be because he has been nearly evangelical about the potential for tech to improve commercial real estate since starting as a broker with Cushman & Wakefield in 2009. He ultimately left the established firm to launch 42 Floors with co-founder and CEO, Jason Freedman – now he is building the opportunity he wanted in the market he loves.

Justin is adamant that the needs of today's tech tenants are distinctly different than those of traditional power-tenants. He recognizes that tech isn't the only growth sector, but focuses on it because, from a broker's perspective, he saw tech tenants as a new breed, one that will require materially different responses from the commercial real estate industry. Some of the key trends he urges landlords (and investors) to consider, paraphrased roughly:

The Meaning of Space: Tech tenants view their space as not just a place to work, but an integral extension of their brand: critical to satisfy current employees, but perhaps even more so to recruit new talent and new investors. More than ever before, office space must be consistent and on-message with the values of the firm.

The Decider: The key decision-makers in space selection are the CEOs, rather than the office of the CFO. These CEOs want to see and feel the space them selves.

Flexibility: More so than financial services or legal firms, tech tenants have specific needs and considerations, which are often unpredictable to landlords and brokers - (like the changes in the MakerBot lease described above) so listing agents and landlords need to be able to listen, and to respond.

Growth Rate: Tech tenants grow at completely different rates than traditional office occupants. As an example, Twitter has changed spaces several times in recent years – taking on more space with every move. Their most recent move – a bid for is transforming the Mid-Market submarket and "push rents up over 60% in a business district that didn’t exist a year ago.

Transparency in an Information Age: A favorite topic of mine provoked an animated discussion: How do tech and other modern tenants want to access information about the spaces they may want to occupy? Per Justin, in general, senior executives in tech are young(er/ ish). They use technology heavily in all other aspects of their lives and don’t see why the opportunities they review should not be able to offer similar levels of information access, quality, and speed. Commercial Real Estate, heavily reliant on paper printouts of floor layouts and arcane files, is often viewed as a vestige of another age. As Justin put it, smiling, of course, to a group of seasoned executives in Chicago a few weeks ago: “They view real estate as a big boulder, in their way as they are building their companies and setting them up for growth. You are the boulder! You do not want to be a boulder!”

In A War For Talent/Tenants/Economic Development: Build Geek Appeal Claire Cain Miller of the New York Times recently framed the rise of super-connected campuses in terms of economic development, and as a battle for primacy in the coming surge of technology growth.

“The East Coast/West Coast rivalry is not just over hip-hop, food and fashion anymore. Now it has made its way to universities preparing the next generation of technologists: data scientists who can make sense (and use) of the explosion of information that is now produced by nearly every industry. New York and Seattle are already sparring over which will be the next hotbed, beyond Silicon Valley, for educating these analysts of the future.”

It Won’t Come Naturally As Miller notes, it's not just the schools that matter. It's the job prospects, access to vc funding, regional culture and amenities. It's also the way our buildings look and feel and our ability to evolve to new standards and expectations. These kinds of changes will not happen on their own - they'll require proactive steps and willingness to invest.

I could argue that the competition goes far beyond New York vs. Seattle, but I agree 100% that the growth, vitality and entrepreneurial talent in discussion is worth fighting for.